How to Invest in Mutual Funds Online?
Mutual funds provide a convenient investment option to the investors, enabling them to avail professional fund management. With a wide range of mutual fund schemes available for the investors to invest in, it becomes easier for them to balance the portfolio to suit their risk profile and financial goals. While the mutual fund offices are working in staggered way/ closed at some locations following the government orders during this Covid-19 pandemic, one may conveniently access the websites of the mutual funds and make investments paperless using digital platforms.
The procedure to invest in mutual funds online is as follows:
The first step to invest in mutual fund schemes is to visit the website of the Asset Management Company (AMC). Browse through the section that reads ‘Invest with Us’, or ’Invest Now’ to initiate the investment process. If one is already an existing investor in that mutual fund, one may also proceed towards the Login section, which provides the details of existing investments with options to access their portfolio and make further transactions.
Validation of KYC (Know Your Customer) Compliance
As per the extant SEBI (Securities & Exchange Board of India) regulations, an investor needs to comply with KYC requirements for onboarding with AMC & to proceed with any financial transactions. This requirement is applicable not only for new investors (all holders) but also for existing investors (all holders). The first input in the transaction process will be PAN (Permanent Account Number) of the investor, which will help to validate KYC compliance status.
KYC Registration Process
The KYC registration is handled by KYC Registration Agencies (KRAs) registered with SEBI. The investor has to undergo the KYC process only once. Thereafter the investor can transact in any of the Mutual Funds.
If the PAN of investor is KYC compliant (with any other mutual fund house through any of the SEBI registered intermediary or demat account earlier, the investor is considered KYC compliant, as KYC with one intermediary is valid across the financial markets.
However, if the investor is investing for the first time and the PAN is non KYC compliant, it may be completed through various options as enabled by SEBI for completing the KYC of this new investor an in-person video verification facility either by filling the CKYC application form and submitting to the respective intermediaries or submitting the required set of documents including the in-person video verification facility offered digitally, if available.
Once the investor has completed the KYC process, they may continue with the investment process.
Details of the Investment
Post KYC verification, the investor must provide the details of the transaction, including the name of the scheme where the investment is desired, Direct/ Regular Plan (quoting AMFI Registration Number of the Holder (AMFI Registered Mutual Advisor), Dividend/ Growth option, the investment amount, details of bank account, nominee details, etc.
The AMC portal will also prompt if the investment is to be done through SIP (Systematic Investment Plan or Lumpsum or Additional Purchase. In case the investment is made through SIP mode, the investor must also provide details like the number of SIP instalments, the SIP start date and end date, selecting a date of SIP investment, SIP frequency, instalment amount. It is mandatory for the investor to invest from the bank account registered in the folio to avoid third party investment.
Payment Gateway for Lumpsum or Additional Purchase
After entering the investment details, the portal redirects the investor towards the payment gateway, to process the investment. The investor must complete the payment through the various payment options offered by respective AMC such as internet banking facility or One Time Mandate facility available for registered investors, UPI (Unified Payment Interface) or NEFT/RTGS reporting module where the investor initiates the funds transfer to respective AMC’s Collection Account and then reports the transaction.
Once the investor completes the payment process, the portal confirms the status of transaction along with related scheme details. The investments must be received before the specified timings to decide on the NAV applicability. All the transactions submitted after the cut off timings, are considered for processing on the Next Business day.
If the investor has opted for SIP registration, the transaction acknowledgement will also contain the SIP registration number.
Registration of SIP with Bill Pay option
If the investor has registered for SIP mode using Internet Banking mode, there is a Unique Registration Number (URN) generated by the AMC on their website. This URN must also be registered the SIP with the investor registered bank’s website Bill pay option to complete the SIP registration process and enable payment of SIP instalments regularly through the bank account as per the desired frequency. It is recommended that while registering the URN through Bill Pay option, investors need to setup auto payments for the SIP registered, so that the instalment amounts get automatically deducted from the bank accounts and the units are allotted against the Folio number (Mutual Fund Identification number maintained by each AMC).
As discussed above, it is very convenient to invest in mutual funds online. Now that one is aware of the entire process of making mutual fund investments, take a step ahead to invest in mutual funds right now.